Oil price drop to hit housing sector

A new study released on Monday by Canada Mortgage and Housing Corp. (CMHC) claims lower oil prices are expected to help contribute to a split in the Canadian housing market.

Oil-producing provinces are expected to slow down but other housing markets are expected to gain ground, the Huffington Post said.

“A slowdown in housing starts and resale transactions in oil-producing provinces such as Alberta will be partly offset by increased housing market activity in other provinces, such as Ontario and British Columbia, which benefit from the positive impacts of declining energy prices, a lower Canadian dollar and continued low mortgage rates," CMHC chief economist Bob Dugan was quoted as saying.

"Moreover, since the inventory of completed and unabsorbed units remains above the historical average, we expect the pace of new home construction to moderate over the next couple of years as builders focus on managing the existing inventory."

CMHC's second quarter forecast is between 166,540 and 188,580 housing starts this year and between 162,840 and 190,930 next year.

The study also said that regionally, Alberta is likely to have a 13.8 per cent drop in housing starts, while Saskatchewan is forecast to be down by 21.3 per cent this year. Ontario, meanwhile, is expected to gain 4.3 per cent.

Moreover, Alberta is may be the big percentage loser with a dip in resales of 19.2 per cent in 2015, while Saskatchewan can also see a drop of 9.8 per cent.

Ontario is also showing positive numbers in the resales forecast, which is expected to be up by 1.8 per cent. B.C. is also expected to have 6.5 per cent in gains.

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